Monday, July 21, 2008

More Reforms From Raul Castro?

Is Raul Castro preparing the ground for more substantive, pro-market economic reforms in Cuba?

BY LATIN AMERICA ADVISORInter-American Dialogue

Cuban President Raul Castro said [recently] that "socialism means social justice and equality, but equality of rights, of opportunities, not of income" and that "equality is not egalitarianism." What is the significance of Castro's comments? Is he preparing the ground for more substantive, pro-market economic reforms? What possible reforms do you see in the offing?

Dennis Hays, Vice President of Thorium Power and a former Coordinator for Cuban Affairs at the US Department of State: Raul will never be the public speaker his brother was, but that doesn't mean he has nothing to say. In an address full of anecdotes and faint attempts at humor, he managed to get across a number of interesting points, including an ad-libbed admission that 'sometimes in socialism two plus two equals three.' But after noting a number of ways in which the Cuban economy continues to be the most dysfunctional one this side of Zimbabwe, he finally got to the point—Cubans can expect to be taxed in the future for many of the things they take for granted now, and major discrepancies in income will become commonplace (starting, of course, to the advantage of the senior military). Two full years after assuming effective control of the nation, Raul still is constrained by the continuing presence of Fidel. Despite the tepid nature of his proposals, Raul felt compelled at the end his speech to note that his brother had determined that his proposals were 'perfect.' Raul is enough of a pragmatist to know that he must interject market-based reforms to appease an anxious and unhappy population, but until Fidel is dead and the last set of eulogies delivered, no significant changes will take place. Further, even after Fidel is safely gone the sort of systemic root and branch reform required is unlikely. Instead, we will see actions that put the generals into BMWs but do little for the average citizen. And nothing, of course, is even contemplated in the area of political reform or human rights. Raul has a plan, but it is too timid to work.

Dan Erikson, Senior Associate for US Policy at the Inter-American Dialogue: Raul Castro has embarked on a concerted effort to re-brand what 'equality' means in the Cuban context by speaking frequently about providing equality of opportunity, not of outcomes. Since becoming president, Raul's early reforms focused on expanding access to consumer goods like cellphones and DVD players, or allowing Cubans to stay in expensive hotels that cater to foreigners. Critics abroad and at home emphasized that most Cubans lacked the financial resources to take advantage of these new freedoms. But that is precisely the point: Raul recognizes that Cuba has already become a society of 'haves' and 'have-nots' and is thus willing to jettison the notion of state-enforced egalitarianism in favor of allowing the 'haves' to have more. In April, Raul released a plan that would allow thousands of Cubans to receive titles to their homes, which had previously belonged to the state. The government then eliminated salary caps and increased pensions for the island's more than two million retirees to nearly $20 a month. Government employees, such as court officers, saw their median monthly salaries jump by more than 50 percent to $27. While Cuban pensions and wages remained extremely low by international standards, they still put more money in the pockets of one-fifth of the population. Last month, Cuba introduced a system of incentive-based pay for state workers based on their productivity. Meanwhile, a quiet revolution is unfolding in Cuban agriculture, as the state moves to decentralize decision-making to the farmers on issues like land use and crop selection. These changes have already riled Fidel, who has warned 'do not make concessions to the enemy ideology,' but the possibility of Raul Castro leading Cuba toward an Asian-style market reform process is becoming increasingly conceivable.

William LeoGrande, Dean of the School of Public Affairs at American University: In his speech to the National Assembly, Raul Castro repeated themes he has talked about ever since assuming Cuba's presidency in 2006: the need for greater economic efficiency and discipline; the need for Cuba to live within its means; and the need for pragmatic reforms to enhance productivity. Raul Castro has long been known for his willingness to experiment with market mechanisms in order to boost production. Over the past two years, experiments in agriculture have become increasingly bold, culminating in the recent decision to allocate state-owned land to private producers to increase food production. More reforms are likely down the road, as promised in Raul's July 26 speech last year. On one level, Raul's reminder that socialism means equality of opportunity, not equality of incomes, is simply a reaffirmation of Lenin's dictum: 'to each according to his work.' Symbolically, though, it expresses the need to tie incomes to productivity and the value of individual incentives. Over the years, Cuba has swung back and forth on the use of moral versus material labor incentives. Fidel Castro always had an instinctive distrust of material incentives, fearing they would corrupt socialist values. At times, Fidel sacrificed economic gains on the altar of ideology, as when he ordered the closure of farmers markets in 1986. Raul, although a dedicated communist, puts results ahead of ideology. From the market experiments in agriculture to the recision of burdensome regulations and the criticism of vulgar egalitarianism, Raul's approach signals a willingness to free individual initiative and entrepreneurship in pursuit of economic growth.

Luis Martínez-Fernández, Professor of History at the University of Central Florida: In his July 11 address to the Cuban National Assembly, Cuba's new president, Raul Castro, announced the latest and most profound ideological shift in the history of the Cuban Revolution. This declaration of ideological change went much further than the usual pendular shifts between two alternating socialist formulas: on the one hand, Che Guevara's model of socialism, based on the application of radical egalitarian measures and the principle 'moral incentives' whereby individual workers are motivated by the spiritual rewards of sacrificing for the benefit of their communities; and, on the other hand, the Soviet model, which allows the retention of capitalist vestiges, such as market activities and material incentives: overtime pay, salary bonuses for high productivity workers, private business activities, and the like. Raul Castro has in fact declared the end of socialism on the island by creating a new definition of socialism that bears no resemblance to the common usage of the term ... He went on to say that egalitarianism is in itself a form of exploitation; exploitation of the good workers by those who are less productive and lazy. This is a far cry from Karl Marx's formulation 'from each according to his ability, to each according to his needs.' Moreover, Castro's statements that his government will eliminate some free services and excessive subsidies to consumer goods gives credence to the arrival of a post-socialist era in which the Cuban state retains control of the economy but pulls back from the social responsibilities of a socialist government.